As if the looming fiscal cliff isn’t frightening enough, new results suggest it’s already doing very serious damage to the economy. And it’s only September.
According to a new survey released by the Business Roundtable, corporate America’s view of the economy is as bleak now as it was in 2009, when the economy was struggling to emerge from a recession.
Also, the survey shows executives are now more likely to cut jobs over the next six months and that companies are less likely to raise their capital spending.
Largely the CEOs who participated in the study cited the fiscal cliff, or the confluence of tax hikes and spending cuts that could go into effect as soon as January 2013, as a major influence behind their decisions.
Dow Chemical CEO Andrew Liveris called the fiscal cliff a “multiplier” that makes any negative catalyst that much worse.
As much as $500 billion in federal spending reductions and expiring tax cuts are due to take effect if Congress and the White House are unable to find a compromise on these issues by Dec. 31, 2012.
As a result, the CEOs also lowered their forecasts for U.S. economic growth.
“The government is failing us as a whole,” charged Liveris on CNBC’s The Kudlow Report. “This is self-inflicted uncertainty.”
They now expect real gross domestic product to rise 1.9 percent in 2012, down from a June forecast of 2.1 percent growth.
In turn, these concerns have already begun to ripple across the economy and might, in part, explain the spate of lowered earnings forecasts from companies such as FedEx and Norfolk Southern.
The findings come less than two months ahead of the U.S. presidential election, in which the weak economy and stubbornly high unemployment are shaping up to be key elements in voters' choice between incumbent Democratic President Barack Obama and Republican challenger Mitt Romney.
The Romney campaign was quick to call out the results of the survey as a sign that Obama's economic policies were not working.
"Business leaders have the gloomiest outlook in three years and the president's failed economic policies of higher taxes and more regulations will only make things worse," spokesman Ryan Williams said in a statement.
The Obama campaign did not immediately respond to a request for comment.
“Whatever president and congress we get in November, it doesn’t matter. What matters is that we get one that gives us solutions,” said Liveris.
CEOs who participate in the Business Roundtable collectively generate $7.3 trillion in annual revenue and employ some 16 million people.
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